Bankruptcy Exemptions in Texas

Whether because of medical expenses or losing a job, there are more people than ever filing for bankruptcy. It can provide the help an individual or family needs to get back on their feet.

However, when filing Chapter 7, some personal property can be liquidated to satisfy creditors; however, there are protections in place that allow many of those filing bankruptcy to claim exemptions for such property. Both federal and state exemptions exist, and Texas allows filers to choose which set of exemptions they desire to use, although they cannot mix them.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Texas state exemption – up to 1 vehicle for each adult with a driver’s license or who relies on someone else to operate a vehicle for them

In order to ensure that they retain that vehicle, debtors must continue to make loan payments that are secured by that vehicle or the creditor may be able to repossess it.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Texas state exemption – Unlimited for any property less than 10 acres in size within a city, town, or village, or 100 acres (200 for families) elsewhere.
  • Sale proceeds are exempt for 6 months after sale
  • Homestead declarations must be filed by the property owner or the court will do so for a fee

In addition, in order to keep homestead property, debtors must continue to make mortgage payments on the property that secures that loan. If they do not do so, the lien holder may have the right to foreclose.

Texas allows exemptions for other forms of personal property:

• Burial plots
• Health aids
• Books containing sacred writings (exempt from the $60,000 family/$30,000 single total personal property limit allowed)
• Home furnishings and heirlooms, food, clothing,
• Jewelry – up to 25% of the special limit
• 2 firearms, athletic and sporting equipment, assorted farm animals with food for those animals, and household pets
• Health savings accounts
• Tools of the trade – tools, books, and equipment, including vehicles and boats used in a trade, profession, farming, or ranching – included in special limit
• Special limit – total of all items, which cannot exceed $30,000 total or $60,000 for head of family

Filing Schedule C of a Bankruptcy Petition

In order to claim any federal or state property exemptions, those filing for bankruptcy must complete Schedule C with their bankruptcy petition. This form requires the following information for every exemption claimed :

• The property claimed
• The federal or state statutes substantiating those claims
• The property exemption value for each claim
• Each claim’s current assessed value (not the market value)

Talk to a Texas Bankruptcy Attorney First

There are more powerful statutes in place now than in the past in order to prevent fraud or those who would take advantage of bankruptcy protections. In order to ensure that those who are sincerely seeking to solve their financial troubles and establish more responsible credit future, it can be essential to call on a Texas bankruptcy lawyer who has dealt with hundreds of consumers needing help and can provide that same service for you.